5 must-have features for premium credit cards

Attention, premium shopper

Do you have great credit, a 6-figure salary and a thick asset portfolio? There’s a good chance your bank will try to sell you on an invitation-only or premium credit card.

These cards tout major rewards and exclusive perks, but, more often than not, carry steep annual fees.

“You could wind up spending “$500 to $3,000 a year, or even more just to hold the card,” says Thomas Nitzsche, a certified credit counselor and media relations manager with ClearPoint Credit Counseling Solutions.

This hefty price is one reason affluent, creditworthy consumers should carefully consider a seemingly elite piece of plastic.

Despite the mystique that issuers intentionally build around these types of cards, “there are a lot of pretenders” on the market, says John Ulzheimer, president of The Ulzheimer Group and founder of CreditExpertWitness.com. “You’ll have to do some research to figure out whether a card is actually worth the cost.”

To help you separate the wheat from the chaff, here are five features to look for in a premium credit card.

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An unlimited or high credit limit

Anyone who can afford a jet or, say, a crystal-encrusted bathtub needs a payment method that makes such an extravagant purchase possible.

As such, if an issuer offers you an invitation-only card, look for it to provide “practically unlimited buying power,” Ulzheimer says. In other words, there should be no credit limit attached to the product.

Second-tier premium credit cards — which are geared toward affluent, creditworthy consumers but are open to anyone who wants to apply — may carry a spending cap. But consumers in these cards’ demographic still should expect a certain amount of purchasing power.

These second-tier products should feature a credit limit “in the neighborhood of $25,000 to $50,000,” Ulzheimer says. “You may not be able to go out and buy an airplane with it, but you certainly may be able to buy a car.”

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Lucrative rewards

Invitation-only and premium credit cards should offer big earnings back on purchases. Prospective cardholders, for instance, should aim to earn from 2% to 5% back in a category they tend to spend a lot of money on.

“Decide what it is you are looking for,” says Beverly Harzog, author of “Confessions of a Credit Junkie: Everything You Need to Know to Avoid the Mistakes I Made.” “If you are just interested in miles, you want to focus on a credit card where you can get the highest baseline on miles.”

Remember that great credit and a stable income should net you more than just solid base rewards. Look for opportunities to quickly earn extra points, miles or cash back.

These rewards could come in the form of a big sign-on bonus. Premium travel cards could offer the equivalent of a free companion ticket if you spend a certain amount of money in a specified time frame.

And the better co-branded airline or hotel cards will let you pool points with loyalty programs or allow you to earn miles not just for airfare, but for status increases, as well.

In turn, “the higher your status, the more miles you earn because you get a bonus based on the level you’re already at,” Ulzheimer says. “These miles just start to snowball.”

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Access

Of course, high-end cardholders should expect more than just some base and bonus rewards, given the hefty fee attached to these products. In order to entice affluent, creditworthy consumers, many issuers market “access” when they pitch their premium plastic.

Invitation-only cards, for example, may tout personal shopping experiences, complimentary amenities, exclusive invites to special events and upgrades at elite hotels. They could even provide early access to concert tickets, chauffeured car services and private jet rentals.

While the exclusive perks may be decidedly less swanky, premium travel cards should at least enable cardholders to get into affiliated airport clubs or lounges so that cardholders can relax before a long trip, Ulzheimer says.

Also, look for travel cards that advertise opportunities to upgrade or give you access to a travel agent who can help you plan vacations.

Don’t instantly decline an offer, however, if all of the aforementioned amenities aren’t included in the terms and conditions.

Instead, “talk to the credit card issuer,” Harzog says. “If you’re interested in the chauffeur car service, call and ask if that’s included.” They may just throw it in to win your business.

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Ancillary protections

You’ll also want to ask if the card carries some of the better ancillary protections that competitive credit card offerings are known to feature. These benefits include extended warranties, price protection and purchase protection.

Premium or invite-only cards, particularly those geared toward frequent fliers, may also carry certain insurance coverage, including trip cancellation insurance or reimbursement on lost luggage.

The best cards will also insure rental cars. Nitzsche was able to take advantage of this perk when he got into a fender bender while driving a borrowed vehicle.

“A lot of people don’t even realize when they sign up for the card that they come with those (benefits),” he says. “Consumers should review the credit card agreement or list of benefits provided on the card issuer’s website for the particular card.”

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Reasonable rates and fees

Interest rates are generally a bit higher on rewards cards and no one should aim to carry a balance on one anyway. (It could essentially render moot all the points or miles you earn.) But that doesn’t mean potential premium credit card holders should settle for any APR.

“You need to look at the fees and the interest and make sure it makes sense financially,” says Nitzsche. “If you see an interest rate that is pushing or over 20%, that’s not good.”

Those with near-perfect credit should also look to score an APR on the lower end of whatever range an issuer is quoting.

If you’re offered something on the higher end or even in the middle, “ask them for a better rate,” says Harzog. “Don’t hesitate to use a negotiating strategy if you’re getting a lot of offers.”

Remember, big-time annual fees associated with many of these products may prove worthwhile. (You should conduct a cost-benefit analysis before signing up for the card.) But feel free to ask whether the issuer is willing to waive the charge for the first year.

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